Which of the Following Statements Is False Concerning § 482

question 2

Multiple Choice

Which of the following statements is false concerning § 482 and its aim of reallocating income and deductions among affiliated companies?

• A)Pricing reallocations made by the IRS are generally sustained by the courts unless found to be arbitrary or capricious.
• B)There is an assumption that the prices set for transactions among affiliated companies are based on tax avoidance.
• C)It is the affiliated companies' responsibility to persuade the IRS that their pricing policies are the same as policies followed by unaffiliated companies.
• D)Proof that a company's pricing decisions are based on sound business reasons is sufficient to avoid any reallocation by the IRS under § 482.

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